Legal News November, 2017

On October 26, 2017 the Ministry of Finance issued Official Letter No. 14475/BTC-TCHQ to response for the problem about tax treatment on scrap and surplus materials, surplus tools of processing contracts in case of tranferring for domestic consumption, as follows:

Before 01/09/2016: For surplus materials and surplus supplies imported for processing not more than 3% of the total quantity of materials and supplies actually imported, when selling or consuming domestically, is necessary to go through customs procedures for transfering the purpose of using. However, it must be declared and paid tax to the inland tax offices according to the provisions of tax law.

From 01/09/2016 up to now: Scrap, waste products, surplus materials and surplus supplies imported for processing do not exceed 3% of the total quantity of each material and supplies imported under the processing contract, are exempted from import tax when consuming them domestically, but it must be declared and paid other taxes (if any) to the customs office.

In case of scrap, surplus materials and surplus supplies imported for processing do not exceed 3% of the total quantity of each material and supplies imported under the processing contract for domestic consumption from 01/09/2016 to the date of this document is issued, the enterprise that declared and paid tax with the local tax authority, does not require to declare and adjust

On October 18, 2017 the Hanoi Tax Department issued Official Letter No. 68151 / CT-TTHT to guide to calculate the personal income tax (PIT) for foreigners. Whereby:

In the case of foreign specialists being non-resident individuals, the company shall deduct PIT at the rate of 20% for the income from the gross pay (including effective wages paid after completion labor contract). Non-resident individuals do not have to declare tax finalization. In cases of the companies temporarily deducted PIT based on Progressive tax tariff, now they re-determined to be non-resident individuals, they shall make additional declarations in replacement of the PIT declaration forms under the guidance in Clause 5, Article 10 of Circular No.156/2013/TT-BTC.

In the case of foreign specialists being resident individuals, the company has to deduct PIT based on Progressive tax tariff. Foreign resident individuals who terminate their contracts in Vietnam must declare their finances before leaving the country.

In case individuals have not finalized PIT upon immigrating and they authorize the company to do that. The company shall settle the PIT on behalf of the individual within 45 days from the date the individual leaves the country.

After the individual had finalized the PIT and also had been no longer a resident under PIT law, if the company incurs a payment relative to effective wages to the individual, the company shall deduct 20% of income before paying for individuals.